Managing Your Innovation Gap

by Drew Boyd

Once you have a systematic and routine way to innovate, you are confronted with a new problem - how to decide how much innovation is enough. For many, this is an odd question. If innovation is essential for survival and growth, most people would want all the innovation they can get. But that is oversimplifying. Too much innovation can overload the system, confuse the organization, and lead to ideation fatigue. So how much is enough?

Here is a useful analysis that can tell you how many ideas are needed to reach your specific growth targets called "Mapping the Innovation Gap."

The steps are:

1. Determine your revenue goals in each year over a specific time horizon. Base this on your firm's strategic planning time horizon (usually 3 to 10 years depending on the industry). Use the actual revenue targets from your company's business plan.


2. Break these annual revenue targets down over a mix of products, new and existing, in each year. Some firms call this a revenue cascade or revenue waterfall. It shows for each year how much of the revenue comes from existing products and how much comes from new products.


3. Estimate your Innovation Yield (number of new ideas needed to produce one new product). This varies by industry and by company depending on factors such as level of investment, core competencies, and access to technology. Various think tanks and consultancies have estimates such as the curve pictured above.


4. Estimate your typical idea-to-launch Lead Time (how much time it takes to develop and launch a product once it is conceived). As with the Innovation Yield, this will vary. Take a look at past product development experience and determine an average time (in years).


5. Plot the number of new ideas needed in each year to produce the necessary new products in subsequent years. Take the number of new products needed in a specific year and divide it by the Innovation Yield. Then plot this number back in time by the amount of Lead Time to develop ideas.

What you end up with is the number of new ideas that need to be generated each year to have a realistic chance of achieving future revenue growth targets. It can be a sobering number depending on how aggressive your targets are. With this number, a general manager can then task the team to "schedule" innovation, and then hold them accountable for generating the necessary number of ideas.


Bottom Line: To grow, companies need a systematic innovation method, and it needs to be applied systematically.


Download "Mapping the Innovation Gap" here.

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Drew Boyd is Director of Marketing Mastery for Johnson & Johnson (Ethicon Endo-Surgery division). He is also Visiting Assistant Professor of Marketing and Innovation at the University of Cincinnati and Executive Director of the MS-Marketing program. Follow him at www.innovationinpractice.com and at http://twitter.com/drewboyd

Do You Have Innovation Fatigue?

Interview - Jeff Lindsay of "Conquering Innovation Fatigue"

I had the opportunity to interview Jeff Lindsay, one of the co-authors of "Conquering Innovation Fatigue" about the recession, innovation challenges that organizations face, the role of government in innovation, and needs of the innovation workforce.

Looking across the broad range of our conversation, the importance of alignment is probably the thread that ties it all together.

My book review of "Conquering Innovation Fatigue" can be found here.


Here is the text from the interview:

1. What is the biggest challenge that companies face in the Great Recession?

Apart from looming external factors beyond their control, I would say that the biggest challenges that they can control are various combinations of fear and pride. Fear of markets, of change, of the unknown, etc., tends to paralyze at precisely the moment when vigorous action is needed. Pride also hinders needed change. When a company has unhealthy optimism in its business plan, in its intellectual property, in its market position, etc., it is likely to be blind to new opportunities and needed changes in its approach. Rather than blind fear or blinding optimism, improved vision can be achieved with what we call "healthy paranoia" on our blog (InnovationFatigue.com).


2. When it comes to people fatigue, what is the biggest challenge that you see organizations facing?

Withholding of important information is a key problem for organizations that are struggling with innovation fatigue. This can happen for a couple of reasons. When a company is struggling and seems to be in decline, some people find that what is best for their own careers is to lay low and only say what others want to hear. Rocking the boat with alternative approaches, bad news, or warnings is viewed as high risk. If a pet project faces serious challenges due to market risk, technical risks, or legal risks, people may not be motivated to challenge the momentum or raise red flags. Likewise, when a company doesn't properly value its innovation community or has broken bonds of trust and mutual respect, the"will to share" can be broken. Employees then may not only refuse to share their best ideas, but also their best advice, including warnings about technical or IP risks. In this case, some may simply play along and not have the courage to speak out where it is needed, for "the company doesn't want to hear my opinions anyway." For a few, it may be a passive-aggressive response, but for most, it is simply feeling that there is no sense fighting.

When the relationship between the company and its innovation community is healthy, the voice of the innovator is heard and people feel motivated to share and to challenge. Their interests are relatively more aligned with the interests of the corporation and are more likely to speak out and share the information needed for success.

My answer actually focuses more on organizational fatigue, but these personal aspects of organizational fatigue are probably where the bigger challenges are versus the internal rivalries and bad behaviors in the people fatigue sections of the book.


3. Where does the greatest opportunity lie for government to make a positive contribution to reducing innovation fatigue?

There are numerous opportunities here, ranging from taxation policies, government patent systems, regulations, and laws affecting university-industry relationships. But all of these could be addressed by the main recommendation we make to policy makers: "Listen to the voice of the innovator." Laws and policies should be considered in terms of their impact on the innovation community of the nation - not just the CEOs of the largest companies. We encourage government to have commissions or panels representing a wide range of innovators - the lone inventor, R&D managers, university professors, corporate innovators, small business leaders and entrepreneurs, etc., and certainly some CEOs - to gain perspectives on the often unintended anti-innovation consequences that government policies can have. This may be especially important to properly weigh various aspects of proposed patent reform, for example. I think government needs to more actively listen to the voice of innovators and understand the external innovation fatigue factors they face.


4. What stands in the way of many companies being able to deliver new innovations to market?

Poor internal alignment. It's a principle I try to teach in a lighthearted way with my cut-and-restored newspaper magic effect on InnovationFatigue.com, but it's a very serious issue. Alignment means that the behaviors of people throughout the corporation are aligned with the common objective of furthering the good of the corporation. Sometimes the culture of an organization or its performance management system rewards people for behaviors that aren't aligned with the long-term good of the company. Many times poor innovation metrics lead to activities and behaviors that game the metrics without advancing the corporation. Keeping the innovation community and other part of the organization in tune with the needs of the company requires broad communication, strong bonds of trust (the "will to share"), clear strategy, strong innovation systems, healthy metrics, good incentives, and broad cooperation across organizational boundaries. We address some of this in our chapter on the "Horn of Innovation," where we discuss the importance of broad internal feedback loops to keep the innovation community involved, in tune, and following the musical/corporate score.

As I say in my video about alignment and innovation, "If you're not aligned, you're skewed."


5. If you were to change one thing about our educational system to better prepare students to contribute in the innovation workforce of tomorrow, what would it be?

Strengthen reading and writing skills. These are foundational for so much. Without them, it's hard to innovate and hard to influence others for the social adoption aspect of innovation. Improved math and science skills would be a bonus, also.


6. What skills do you believe that managers need to acquire to succeed in an innovation-led organization?

Humility and concern for the people around them. That concern and humility will lead them to listen to the voice of the innovators in their organization and strengthen the will to share and the alignment of innovators with the needs of the corporation. Innovation is all about people. If leaders don't have their trust and respect, if they don't have their ears and their hearts, they won't have their minds.


As a special bonus, here is a video of Jeff Lindsay talking about the importance of alignment and doing a bit of magic:





What do you think?

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Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

Book Review and Innovation Summary - "Conquering Innovation Fatigue"

by Braden Kelley

About a month ago I received "Conquering Innovation Fatigue - Overcoming the Barriers to Personal and Corporate Success" in the mail, a 284-page piece co-written by Jeff Lindsay, Cheryl Perkins, and Mukund Karanjikar. Now you might be thinking - Everyone is so excited about innovation, how can anyone get innovation fatigue?

Well, while most authors choose to write about the green fields or the blue oceans you can potentially create by pursuing innovation, "Conquering Innovation Fatigue" instead chooses to focus on the things that can wear down the inventor, the manager, and the innovator. The authors classify potential innovation fatigue into three main classes of innovation fatigue:

1. People Fatigue


2. Organization-Level Fatigue (Strategy, Culture, Actions)


3. External Fatigue

And then break down those classes of innovation fatigue into Nine Leading Fatigue Factors:

People Fatigue:

1. Theft of the invention and exploitation of inventors


2. Innovator deficiencies (e.g. unreasonable expectations, impatience, unhealthy pride)


3. The NIH syndrome ("Not Invented Here")

Organization Level Fatigue (Strategy, Culture, Actions):

4. Breaking the will to share (loss of cooperation from the innovation community)


5. Fundamental flaws in decision making and vision


6. Open innovation fatigue (corporate barriers to external innovation and collaboration)

External Fatigue:

7. Patent pain: barriers to intellectual property protection


8. Regulatory pain: challenges in policy, regulation, and law


9. University-industry barriers

Risk is discussed briefly in the book. As many of you may know, most companies end up focusing on small, incremental innovation because the more disruptive ideas are likely to been viewed as too risky. Smart companies don't spend all of their energy trying to de-risk every idea, but instead engage in innovation portfolio management that spreads innovation investment across ideas with different risk profiles and time horizons.

The book makes the point several times that innovation is not always fast, including a story about how it took the British Navy two centuries (200 years) to adopt the cure for scurvy. Along these lines, I'll be writing and publishing an article about slow innovation later this week.

One of the points I particularly liked in the book was the section talking about how there can be lots of logical reasons why an innovation project should not be funded or not proceed after funding. So, don't take it personally if someone wants to kill your innovation idea, instead try to anticipate as many of these logical reasons to kill it and strengthen your idea or have your rebuttals ready. Be your own devil's advocate, and deprive others of the opportunity in the process.

Breaking the Will to Share

As more and more organizations try to establish an innovation-led organization or choose to try and differentiate themselves based on innovation outcomes, nothing is more crucial than maintaining the will to share among employees and any other group that you ask to participate in your innovation efforts. The authors break down the will to share in this way:

Maintaining Trust

1. Fair, Helpful Performance Reviews


2. Rules Consistent, Fair


3. Promises Kept

Sense of Inclusion

1. Access to Insights, Results


2. Inclusion in Decision Making


3. Talents Valued, Used

Effective Incentives

1. Financial Incentives


2. Intrinsic Incentives


3. Likelihood of Impact

Innovating Beyond Innovation

There was a great call-out in the Orion Energy Systems case study about innovative reasons to believe when your innovation idea faces doubt. The point can be summarized in this quote from the book:

"Sometimes a great invention is not enough to deal with the social aspects of innovation. Further creativity is often needed to help customers change their behavior and try something new."

Innovating from the Inside Out

Finally, I'd like to agree with the authors on two important points that we all need to be more aware of as we push for increased innovation in the United States or elsewhere:

1. An incredible number of the great inventions and companies credited to discovery or formation in the United States were created by immigrants. The United States and any other country in the world hoping to start their share of innovation-led organizations, must ensure that immigration policies do not place mis-guided caps on immigration from well-educated and populous countries.


2. When comparing the potential benefit of an innovation idea, we must remember that we should not typically compare the potential benefit against some sort of continuing steady state. The absence of action will generally not lead to maintenance of the current state, but instead inaction will lead to a general decline in financial performance as competitors choose their own path of action.

Conclusion

There are a couple of great case studies in the book, an interesting framework or two, and lots of good information about intellectual property that most books on innovation don't have, making it a worthwhile reference for the layperson.

My interview with co-author Jeff Lindsay can be found here.

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Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

BOF 3.0 - Innovation Fatigue Session

The second of the Brightidea Birds of a Feather (BOF 3.0) unconference discussion sessions I attended posed the question - Is there such a thing as innovation fatigue?

Here are some of the key insights and comments from the session:

• You can't run people in crisis mode forever. If you create an innovation panic, your people and organization will get innovation fatigue.


• How can you throttle up and down both the top and bottom of the innovation funnel?


• Sometimes you accumulate too many ideas to develop, and other times you don't have enough.


• Any innovation approach should pay attention to the pacing and have learning built in (a feedback loop)


• How much change can people handle?


• Should innovation be part of the regular job for everyone in the organization?


• Should you have an annual innovation plan?


• Would more than two innovation jams per year be too much?


• Should ideation really be fully separate from implementation?


• Is it possible for people to not have enough time to innovate AND to have innovation fatigue?


• If the cynicism starts, you're in trouble. Innovation efforts have to show tangible results to receive continued support.


• It can be empowering to line managers to have someone owning and driving innovation.

Overall for me the key takeway was that a structured approach to innovation is needed that clearly lays out:

• Why innovation is important and that it is never 'done'


• The organization's innovation strategy and goals (yes they are different)


• The organization's innovation policies and processes


• The employees' role in innovation, how to contribute, and why to contribute


• How progress will be measured and results will be communicated

What are your thoughts or experience?


More from the Brightidea Birds of a Feather (BOF 3.0):

• BOF 3.0 - Ruffle Your Innovation Feathers


• BOF 3.0 - Culture of Innovation Session

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Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.